Newsflash: Farmers Edge Inc. (TSE:FDGE) Analysts Have Been Trimming Their Revenue Forecasts

The analysts covering Farmers Edge Inc. (TSE:FDGE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the current consensus from Farmers Edge's six analysts is for revenues of CA$38m in 2022 which - if met - would reflect a reasonable 4.7% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing CA$49m of revenue in 2022. The consensus view seems to have become more pessimistic on Farmers Edge, noting the sizeable cut to revenue estimates in this update.

View our latest analysis for Farmers Edge

The consensus price target fell 14% to CA$2.61, with the analysts clearly less optimistic about Farmers Edge's valuation following this update. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Farmers Edge at CA$4.50 per share, while the most bearish prices it at CA$2.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Farmers Edge's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 9.6% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 20% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 18% per year. Although Farmers Edge's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Farmers Edge this year. They also expect company revenue to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Farmers Edge after today.

There might be good reason for analyst bearishness towards Farmers Edge, like a short cash runway. Learn more, and discover the 2 other flags we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.